India’s Office Real Estate Market Is Booming

According to a recent report by India Ratings and Research (Ind-Ra), the Indian arm of global credit rating agency Fitch Ratings, India’s office real estate market is expected to witness strong growth as companies are likely to lease more office space over the next two years.

Around 79 to 80 million square feet of office space is expected to be leased in FY 2025-26. This could further rise to 85 to 90 million square feet in FY 2026-27. This clearly shows that demand for office space in India is increasing steadily.

Growth of Global Capability Centres (GCCs)

GCCs are offices set up by multinational companies in India. They handle work related to technology, finance, customer support, research, and other important functions. As these GCCs continue to expand, demand for office space is also increasing.

Rise of Flexible Workspaces

Companies are increasingly preferring co-working spaces and managed offices. These workspaces are cost-effective and offer greater flexibility. As more companies adopt this model, demand for flexible office spaces is growing rapidly.

Vacancy levels are expected to remain between 12 and 18 percent. This means that most offices are likely to continue having tenants and the market is expected to remain healthy in the near future.

Will Office Rents Increase?

Yes. Office rents are expected to increase by around 4 to 6 percent between FY 2026 and FY 2027.

While the office market is expected to grow, global events could lead to higher oil prices, inflation, currency fluctuations, construction costs, and financing costs. These factors could delay several under-construction projects.

However, this does not mean that companies will stop leasing office space. Experts believe that office demand will remain strong in the near future.

Which Properties Are Safer Now?

The report by India Ratings and Research states that the following assets are likely to perform better:

• Completed Grade-A office buildings
• REIT-owned properties
• Office markets with a large presence of GCCs Which Industries Are Taking Office Space?

Demand is coming from several sectors, including:

• Technology
• Banking and financial services
• Insurance
• Engineering
• Research and development
• Manufacturing
• Consulting
• E-commerce
• Domestic companies What Might Multinational Companies Do?

Some multinational companies may:

• Expand more slowly
• Delay new office space plans
• Use flexible offices instead of committing to large office campuses How Important Are GCCs?

GCCs are expected to account for around 45 to 50 percent of India’s total office demand. Flexible workspaces could contribute another 25 to 35 percent.

Pune remains one of India’s largest flexible workspace markets, with more than half of its office leasing activity coming from flexible workspace operators.

Developers are currently focusing on completing projects and securing tenants. They are also avoiding speculative construction and giving priority to projects that have higher chances of completion and occupancy.

REIT-grade office assets are attracting investors because they have high occupancy levels of 90 to 92 percent. Moreover, these assets generate steady income and already have a large amount of pre-leased office space.

More offices will lead to more commercial development, greater demand for housing, better roads and metro connectivity, and more malls, restaurants, and retail spaces. They will also create more jobs and economic activity.

India’s office market is booming because multinational companies and flexible workspace operators are taking up more office space. This is creating significant opportunities for commercial real estate, residential projects, and infrastructure development across major cities.